Manufacturing Accounts (Copy)
Topic 5.5: Manufacturing Accounts – Quiz
O Level and IGCSE Accounting
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
1. Which of the following is a direct cost in a manufacturing business?
A. Factory rent
B. Salary of factory supervisor
C. Wages of machine operators
D. Office stationery
2. Which cost is not included in the prime cost?
A. Direct labour
B. Direct materials
C. Factory manager salary
D. Direct expenses
3. What is the formula for calculating prime cost?
A. Direct materials + Indirect labour + Overheads
B. Direct materials + Direct labour + Direct expenses
C. Total cost – Indirect cost
D. Factory cost – Overheads
4. Work in progress at the end of the year is:
A. Added to cost of goods sold
B. Deducted from cost of production
C. Added to closing inventory
D. Ignored in the accounts
5. Factory overheads include:
A. Delivery expenses
B. Cost of raw materials
C. Depreciation of machinery
D. Wages of factory workers
6. Which of the following would NOT appear in a manufacturing account?
A. Direct labour
B. Factory lighting
C. Rent of head office
D. Factory maintenance
7. What is the purpose of a manufacturing account?
A. To calculate net profit
B. To calculate cost of goods sold
C. To calculate factory cost of production
D. To calculate total assets
8. Opening work in progress is:
A. Added to prime cost
B. Deducted from raw materials
C. Ignored
D. Treated as income
9. Closing work in progress is:
A. Added to prime cost
B. Deducted in the income statement
C. Deducted in the manufacturing account
D. Added to sales
10. Factory cost of production is transferred to:
A. Statement of financial position
B. Trading account
C. Profit and loss account
D. General journal
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
11. Which item appears in both manufacturing and income statements?
A. Cost of production
B. Prime cost
C. Sales revenue
D. Direct materials
12. Indirect labour includes:
A. Wages of workers making goods
B. Salary of production manager
C. Payment to delivery driver
D. Overtime pay to assembly worker
13. The cost of lubricants for factory machinery is classified as:
A. Direct material
B. Direct expense
C. Factory overhead
D. Selling expense
14. Which item is NOT part of direct cost?
A. Cost of timber used in furniture
B. Carriage inwards on raw material
C. Rent of production office
D. Wages of carpenters
15. Which of the following is included in the income statement only?
A. Prime cost
B. Factory rent
C. Office salaries
D. Raw material consumed
16. Indirect costs in a manufacturing business include:
A. Raw materials
B. Factory power and heating
C. Direct wages
D. Carriage inwards
17. In a manufacturing account, raw material consumed is calculated as:
A. Opening inventory + Purchases + Closing inventory
B. Purchases + Carriage inwards – Closing inventory
C. Opening inventory + Purchases – Closing inventory
D. Purchases – Returns
18. The term ‘factory cost of production’ includes:
A. Only direct costs
B. Direct costs + office salaries
C. Prime cost + factory overheads
D. Sales – expenses
19. The manufacturing account shows:
A. Cost of sales
B. Cost of production
C. Net profit
D. Sales
20. The salary of the production supervisor is a:
A. Direct expense
B. Selling expense
C. Indirect cost
D. Factory direct wage
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
21. Which of the following is included in prime cost?
A. Indirect labour
B. Factory rent
C. Direct expenses
D. Depreciation of equipment
22. Factory rent is classified as:
A. Direct expense
B. Office expense
C. Factory overhead
D. Distribution expense
23. Which of the following best describes the format of a manufacturing account?
A. Debit and credit format
B. Narrative format
C. Vertical sectioned format
D. Trial balance
24. Which of the following accounts is used to record the value of closing work in progress?
A. Manufacturing account
B. Trading account
C. Suspense account
D. Balance sheet only
25. Factory cost of production is transferred from:
A. Trading account to income statement
B. Manufacturing account to trading account
C. Trading account to balance sheet
D. Income statement to manufacturing account
26. Which is the correct order of calculation in a manufacturing account?
A. Factory overhead → Prime cost → Cost of production
B. Raw materials → Prime cost → Overheads → Production cost
C. Net sales → Prime cost → Gross profit
D. Sales → Overheads → Profit
27. Why is work in progress adjusted in the manufacturing account?
A. To calculate profit
B. To match income with expenses
C. To find accurate factory cost
D. To record overheads correctly
28. Which of the following is a direct material?
A. Electricity
B. Timber used in table production
C. Glue used in packaging
D. Factory rent
29. Factory maintenance is classified as:
A. Selling expense
B. Factory overhead
C. Direct expense
D. Office expense
30. What happens to depreciation of factory machinery in accounts?
A. Shown in trading account
B. Added to factory overheads
C. Added to direct expenses
D. Deducted from income
Answer key and explanations
Topic 5.5 – Manufacturing Accounts
O Level and IGCSE Accounting
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
1. Correct Answer: C
Explanation: Wages of machine operators are a direct cost because they are directly related to the production of goods.
2. Correct Answer: C
Explanation: Factory manager salary is an indirect cost, not part of the prime cost.
3. Correct Answer: B
Explanation: Prime cost = Direct materials + Direct labour + Direct expenses.
4. Correct Answer: B
Explanation: Closing work in progress is deducted when calculating total cost of production.
5. Correct Answer: C
Explanation: Depreciation of factory machinery is a factory overhead, not a direct cost.
6. Correct Answer: C
Explanation: Rent of head office is an administrative expense, not part of manufacturing account.
7. Correct Answer: C
Explanation: The manufacturing account’s purpose is to calculate the factory cost of production.
8. Correct Answer: A
Explanation: Opening work in progress is added to the prime cost when calculating total cost of production.
9. Correct Answer: C
Explanation: Closing work in progress is deducted at the end of the manufacturing account.
10. Correct Answer: B
Explanation: Factory cost of production is transferred to the trading account.
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
11. Correct Answer: A
Explanation: Factory cost of production is calculated in the manufacturing account and transferred to the trading account.
12. Correct Answer: B
Explanation: Salary of the production manager is not directly involved in making products, hence it’s indirect labour.
13. Correct Answer: C
Explanation: Lubricants are necessary for production but are not part of the product—classified as factory overhead.
14. Correct Answer: C
Explanation: Rent of the production office is an indirect cost, not a direct cost.
15. Correct Answer: C
Explanation: Office salaries are administration expenses and only appear in the income statement.
16. Correct Answer: B
Explanation: Power and heating for factory use are part of indirect (overhead) costs.
17. Correct Answer: C
Explanation: Raw materials consumed = Opening stock + Purchases – Closing stock.
18. Correct Answer: C
Explanation: Factory cost = Prime cost + Factory overheads.
19. Correct Answer: B
Explanation: The manufacturing account is used to calculate the factory cost of production.
20. Correct Answer: C
Explanation: Production supervisor’s salary is indirect labour and part of factory overhead.
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course
21. Correct Answer: C
Explanation: Direct expenses are part of the prime cost (with direct materials and direct labour).
22. Correct Answer: C
Explanation: Factory rent is classified under factory overheads.
23. Correct Answer: C
Explanation: Manufacturing account is normally prepared in vertical sectioned format.
24. Correct Answer: A
Explanation: Closing work in progress is recorded in the manufacturing account to adjust cost of production.
25. Correct Answer: B
Explanation: The cost of production is calculated in the manufacturing account and transferred to the trading account.
26. Correct Answer: B
Explanation: Correct order: Raw materials → Prime cost → Add overheads → Factory cost of production.
27. Correct Answer: C
Explanation: Work in progress is adjusted to ensure the total cost of goods produced is accurately calculated.
28. Correct Answer: B
Explanation: Timber used directly in making furniture is a direct material.
29. Correct Answer: B
Explanation: Maintenance of the factory is classified under factory overhead.
30. Correct Answer: B
Explanation: Depreciation on factory machinery is added to factory overheads in the manufacturing account.
Written and Compiled By Sir Hunain Zia, World Record Holder With 154 Total A Grades, 7 Distinctions and 11 World Records For Educate A Change O Level And IGCSE Accounting Full Scale Course